Imagine walking into work and opening your email, only to find that a beloved company benefit has resulted in you owing the IRS millions of dollars — that is a reality RCID employees are now facing.
Governor Ron DeSantis’ takeover to convert the Reedy Creek Improvement District into the Central Florida Tourism Oversight District has been met with divisive opinions from both taxpayers and employees. And if you remember a particular Disney World perk that was offered free to employees for years during the board’s time as the RCID, it’s now become a hot topic again that’s at the center of a huge tax bill.
Employees working for Governor Ron DeSantis’ Central Florida Tourism Oversight District may have been shocked to learn that they owe the Internal Revenue Service more than $2 million in back taxes. The news was broken to employees through an internal memo according to the Orlando Sentinel.
The huge tax bill seems to stem from a former yearly perk of complimentary Disney World annual passes given to employees of the former Reedy Creek Improvement District according to district administrator, Glen Gilzean. Gilzean penned an email to employees addressing concerns over the bill.
“[I]t has come to the attention of the district administration that the previous leadership chose not to inform staff about their IRS obligations to pay legally owed taxes on season pass benefits,” said Gilzean.“This has resulted in our employees owing over $2 million in income back taxes.” “The Central Florida Tourism Oversight District is working to resolve the matter by covering the back taxes owed by employees and retirees and is awaiting a response from the IRS,” Gilzean wrote.
Employees of the district have raised concerns to leadership indicating they were unaware of the tax liability, and in an email from Matthew Oberly, a district spokesperson, he indicated that “CFTOD team members have communicated they appreciate the administration’s willingness to absorb a significant financial burden that accumulated over the past several years.”
Around 400 people work for the oversight district, which people may remember has been at the center of DeSantis’ legal battle with Disney. DeSantis hand-picked the new CFTOD board to replace Disney-friendly members this past February as part of a state takeover of the previously established board known as the Reedy Creek Improvement District (RCID).
When the new board members took over, one of their first orders of business was to evaluate and tweak employee benefit programs, and they took a particular interest in one that provided Disney World annual passes and discounts to employees. The newly appointed board accused the previous administration of maintaining an “unethical” program that unfavorably benefited Disney over other Central Florida businesses. However, when the board proposed a yearly $3,000 stipend in place of the former benefit, they were met with backlash from some employees who maintained this perk was a key factor in their decision to work there.
According to Orlando tax attorney Charlotte A. Erdmann (who’s neither a part of the district nor entirely looked over the case yet), if the IRS finds that taxes were never paid on the Disney World park passes, both the district and the employees could face tax implications.
“The Disney passes were likely a taxable benefit, similar to wages or bonuses,” said Erdmann. “Due to the nature of the benefit, they were unlike cafeteria plans, medical benefits and other pre-tax benefits. They are also of substantial value.”
Although the proposed strategy to resolve the tax bill has not been publicly discussed, Erdmann shared that if the district pays the tax liability, including that of its employees, the taxpayers would be the ones out of millions to clear up the bill. It’s also important to keep in mind that Disney and its affiliates pay about 86% of the district’s property taxes.
Gilzen also attempted to curb heightened employee concern over the uncertainty of the bill and can only offer this piece of assurance to employees for now, “Please be assured that we are diligently working to resolve this matter as soon as possible.”
While the outcome of this matter is still to be clarified, we’ll be interested to see just exactly how the district can satisfy all the parties involved including the IRS, taxpayers, and employees while still maintaining the district’s approval. Be sure to stay tuned with us for more on this and other Disney news.
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Do you think Disney employees should have been told about the tax liability for employee benefits earlier? Give us your thoughts in the comments below.